The development and implementation of business models for e-business systems has turn out to be increasingly popular within the research and business fields. It is my believe that many of e-business models for e-business are stagnant after implementation, some succeed as anticipated, while others completely fail. In nature, it is important for a professional to provide a historical view of an e-business model in order to understand all the details of its success or even failure of such a system. In this paper, we draw upon the general emergent knowledge of e-business, provide a simple framework of the e-business for PepsiCo, evaluation of their e-business models and understand the reasons for its failure. Since a various technologies are incorporated by PepsiCo’s e-business plan, the range of applications used is very large. The e-business plan affects the company’s product definition because it becomes easy to redefine the existing, and the new good and services. The e-business plan also touches all aspects of the company including the way in which new products are created; ways of working with other merchants; and goods and services delivery to clients.
When new expertise, especially which involves the unconventional information technology way appear, many individual establishments perceived these technologies as means of bettering the currently existing establishments practices. For example, many establishments expect that the technology will play part in saving time and cutting down on costs. Notwithstanding, many of these fresh technologies often provide the establishment with the opportunity to fundamentally change most or all the accepted practices. Such technologies are also expected to give the establishment potential that enables totally new approaches. Normally, these advanced aspects of technologies such as the e-business system adopted by PepsiCo is not fully tapped or has been understood by the establishment very slowly.
PepsiCo’s e-business technology is one sample of the new technologies that confront all industries with the prospective of creating incoherence with the traditional ways. Hence, they should be taken as opportunities for establishments to revolutionize and gain a competitive advantage in the market . Overall, rapid change and insecurity of stakeholders in the business world has always been an increasingly imperative issue of discussion. The rapid modification of working systems and the insecurity are contributed to by various factors, such as the technological development pace; the miscellaneous and niche markets that are ever changing; better competition with rivals; and the demanding client-base that has increasingly huge expectations.
This rapid change, unreliability, and unpredictability within the business environment have aggravated the prevalent speculative nature of e-business activities. For this reason, e-business systems such as the one adopted by PepsiCo must be dealt with in the perspective of the market conditions. The e-business technologies are a basis of swift change, uncertainty and are also a way of handling the increasingly difficult competitive conditions in the business world. Thus, establishments such as PepsiCo should consider the fundamental question as to how e-business systems can assist the company in the business environment. This can be achieved by helping to increase the customers’ requirements’ knowledge and by supporting the custom-making of these consumer goods and services.
What went wrong?
The PepsiCo e-business project did not go well as expected, all due to various reasons. These numerous reasons point to why this project may not have been successful as earlier hoped. Many of the reasons for this failure were easy to identify and were very definite whereas, others needed a lot of digging into the structure of the project and the company at large in order to identify.
Improper E-Business Management
Lack of Proper e-business management within the PepsiCo management was not up to the anticipated standard. Due to this, many of the human-related troubles arose including, the envisioned clients nonconforming and differing with the modification in the company’s business process. These intended consumers were also found to be getting inadequate training concerning the e-business working structure, and; many PepsiCo company employees were unable to understand the freshly installed e-business system. The presence of these handicaps in the process consequently resulted to low performance and the ultimate failure of the e-business project.
Incompetency of the Management
The incompetency of the company’s management related to the e-business project was also responsible for the difficulties that the project encountered in its configuration process, as well as in the inability of company’s management to gear up for an ultimate makeover that would involve the crucial business processes (Sanders 2001: 22, 23, 30). This issue of management was not just limited to PepsiCo as it had been earlier evident in other businesses as research showed. For instance, it is in the same light of management incompetency that A-DEC Inc., a company that offers Dental Equipment Solutions for the Dental Operatory lost a great deal of business when its workforces began lagging on the process of making and accepting orders, building of products, and transporting of goods to traders.
Complexity In Technological
There was also technological intricacy in the e-business project of PepsiCo. Since most of the role-based e-business systems of nowadays are probably the most intricate and comprehensive information systems, many personnel may not be in a position to completely understand and work with the newly implemented system. Many researchers have recounted that most role-based e-business systems are mainly based on refreshing powerful technologies, which most of the time, demand very different sets of proficiencies to the commonly acceptable, and used legacy systems. Evidently, many researchers also assert and submit that implementation of role-based e-business system is so sophisticated that it its difficulty has been demonstrated for numerous companies. For instance, in efforts to back these researcher’s views, a study demonstrated that businesses with role-based e-business is an intricate organizational solution are in all likelihood to disseminate it tardily and in throttled capacity, and may end up not understanding its full advantage and they may even end up in total failure (Gale, Krell & Abraham 2005: 118, 173).
High Cost of the E-Business Technology
The other hindering and incapacitating reason for the e-business model designed for PepsiCo is the cost of the e-business technology. According to research, many e-business models are disreputably expensive, both in terms of the time necessary to implement them, and the financial cost that come with purchasing and implementing these systems (Holden & Gulbrandsen 2009: 97). For the success and implementation of an e-businesses system could actually take from one to four years. This can resultantly cost from a few hundreds of thousand dollars up to millions of dollars. Just like, it happened with the PepsiCo project, it is evident that many common businesses do underestimate the time and cost necessary for such a project and thus, they thus end up in incomplete implementation of total failure.
Even though the fact that the cost price of just the pre-coded software of the desired e-business system is comparatively cheaper than other systems when paralleled with the company’s internal development; it turns out that the outright total cost of implementing e-businesses system for successful running of a business could go somewhere from three to five times its procurement price. The implementation cost of role-based e-businesses system is even higher especially when a company settles on undertaking major customization as the one that PepsiCo was undergoing in this case. For instance, the cost budget of hiring consultants is also expensive. In addition, all other related expenses that come up with implementing such a major e-businesses system, the general budget for the implementation.
Unfamiliarity with the Organizational Change
Organizational change was also another reason for the failure of implementing the e-business system at PepsiCo. The reason for this is because, this e-business system implementation was not just a software project, in fact, and it was an organizational transformation project. For this reason, the e-business implementation project demanded total collaboration, joint effort, and planning for organizational change, which are difficult to accomplish if the higher management is over preoccupied with other things and thus, they end up lacking time to give the entire project sufficient attention (Gale, Krell & Abraham 2005: 118, 173). Changing the business model of the company was also deemed to have been too frequent and thus, ended up triggering failure of the company’s business.
In addition to the complex reasons that made the success of the PepsiCo e-business project a total failure, there were other small hindrances. For instance, even prior to the start of the implementation of the project, some of staff and stakeholders were already having a wrong mindset about the entire functioning of this project. Thus, they did not fully embrace the e-business project and ended up contributing as much to the project as would have been expected of them. Some of these stakeholders argued that other business models that the company was intending to try out could be much better in giving the company a quick fix and cost effortless dollars.
PepsiCo will need to do various things right for the e-business project to be successful in future. The company will need to iron out the issues related to general management, cost management, knowledge management, and change management. The implementation of all these forms of management determines the success or failure of any project . The following are the recommendations to ensure that PepsiCo’s e-business project become successful in future.
PepsiCo will need to consider the e-business project as a task that has to be completed with an expected budget. It is as if computing up the prices of paper and ink, or raw materials for building and house, or the number of hours spent on a developing software program. Calculating the cost of these items is not that difficult. Before starting the e-business project, PepsiCo will need to lay out clearly all the prices for all the requirements (Andersen 2003, 157-160). What will remain is the issue of finding out how much the company will need or how many employees’ hours it will probably take, and multiplying.
As learned from the failure of the project, the issue with budget arises when materials required for the project are wasted on faults and errors or when unpredicted problems occur. Accordingly, PepsiCo to avoid failure in future, it will need to plan for these issues early by building up a buffer into the project budget. In that case, the company will need to plan for a few complications and add the possible cost to the total budget, on the off chance. One of the fastest ways for PepsiCo to keep to its budget is to ensure the project is completed by the deadline. While considering the cost, PepsiCo will need to realize that time, resources, and money are the three key areas to concentrate on and harness for effective and successful project management (Shields 2001: 94-95). In relation to project management, whether the management team carries out cost control or not can create or break the budget of a project. In future, PepsiCo can better achieve cost control by creating a budget that is consistent with procedures for actual expenditure (Napier 2006: 2). Occasionally, it might be indispensable for PepsiCo to make amendments, but it is imperative to stick to the budget as tightly as possible during the process of managing the e-business project.
Another significant aspect of cost control relates collecting actual costs and creating reports for those expenses on a regular basis. Additionally, it will be important for PepsiCo to precisely report and habitually evaluate progress throughout every phase of the e-business project. To ensure success, it will also be wise for PepsiCo to keep a close eye on trends of costs and approximate costs of work that would not have been completed. Once the company determines these figures, it will be required to closely compare the estimates to the final cost of completion of the e-business project. PepsiCo will also need to account for okayed budget changes and cost variances to ensure proper cost control. PepsiCo will also need to bring any divergences not within the limits of budget controls promptly to the attention of the management team of e-business project.
To manage technological intricacy, PepsiCo will need to concentrate on knowledge management as it relates to the e-business project management. Knowledge management in relation to projects is basically a systematic succession of actions for coordinating and administering knowledge; creating and developing teams; and carrying out and conserving technologies to ascertain that applicable and filtered information is being put in use properly and is correctly shared among the people charged with the responsibility of seeing through the e-business project.
PepsiCo should be aware that if the e-business project team lacks efficient transfer of knowledge, then this lack contributes to wasted efforts and inadequate project performance. The company will also need to realize that unless the project management team has clearly common goals, undertakings and other information, it is difficult to do things expeditiously. PepsiCo will have to follow a systematic sequence of activities for organizing and distributing knowledge, developing and training teams, and implementing and maintaining technologies to ensure that relevant and filtered information is being properly used by and accurately shared across employees.
The reason for this is so as not to lack efficient knowledge transfer, which in this situation leads to wasted activity and poor project performance. In addition, without clearly shared goals, tasks and other information it is hard to do things efficiently. The company will have to group the multiple project processes and transfer the knowledge to create a system that helps arrange project information and simplifies access and use of project data by the team (Dijk & Universiteit 2008: 18, 21). This will in turn leverage existing knowledge in terms of completed projects, and then connect your employees with the existing information technology space of your organization to automatically save time, and deliver current project faster and with better results.
Adaptability of PepsiCo to the current change is the only guarantee of survival. PepsiCo needs to promote agility to enable a competitive edge by taking products and services to market before the competition. Change management will go a long way into enabling IT to become more stable and responsive, helping to drive agility and maintain business continuity. This is possible through implementation of ITIL best practices for change management, which will help the company’s the business to regain control by logging all changes, applying a defined and repeatable change process, ensuring visibility and enforcing authorization and compliance.
The company should also consider implementing change management and configuration management concurrently in order for the e-business system to gain full strategic control of the infrastructure. In the effort of change management, PepsiCo should surely involve the stakeholders at all stages including the beginning. By doing this and spending the time to understand the internal and external requirements of the customer you will reduce the scope for error later on in the projects development. This will also provide people with an opportunity to ask questions and make suggestions. Change management will also include ensuring that all those involved are keeping up to date with progress.
With the always-present complexity within the organizational and business issues that are involved in implementing an e-business system in any organization, an all-conclusive analysis that involves the strategic, the technical and even the organizational evaluations should be advocated for. Once these assessments are all accomplished, another precise cost and benefit scrutiny of the organization ought to be commenced. Decisions should then be made on the basis of strategic e-business analysis and on the calculations of the return on investment (ROI). If an establishment discovers that the gains are not substantial enough to warrant the capital investment in the technology and the risks of traditional system overhaul, then, a suitable way forward ought to be taken so as to make use of the existing e-business services.
In addition, if the enterprise used services of external establishments, it is crucial to review such a decision regularly. The assumptions are taken in business case explanation to tell why quick changes in technologies such as PepsiCo’s e-business may rapidly become invalid. The issue of supply chain management, which includes vision alignment, developing open and efficient communications; developing commitment to generate mutual gains in the long-term, ought to be considered. Finally, the costs related to all the issues in e-business ought to be included in the cost and benefit analysis.